01—Abstract
Summary
Summary of the 10-K filed February 28, 2019. Cited figures are marked; the original filing is the authoritative source.
Arch Capital Group Ltd. (ACGL) reported solid financial results for the year ended December 31, 2018.
The company demonstrated strong underwriting income across its insurance, reinsurance, and mortgage segments, contributing to a net income of $713.6 milliona available to common shareholders. The book value per share increased to $21.52, reflecting disciplined risk selection and management across its diverse operations. The company continues to focus on specialty lines, leveraging its underwriting expertise and strong capital base to navigate a competitive market, while also strategically expanding its mortgage insurance business.
02—Key points
Key Highlights
- Generated $5.35 billion in net premiums written for the year ended December 31, 2018, a slight increase from the previous year.
- Reported net income available to Arch common shareholders of $713.6 million, indicating robust profitability.
- Book value per share grew to $21.52 at year-end 2018, up from $20.30 in 2017, demonstrating a positive trend in shareholder equity.
- The insurance segment, while experiencing a slight underwriting loss ($28.9 million), showed improved combined ratio at 101.3% compared to 109.1% in 2017, driven by lower catastrophic event activity.
- The reinsurance segment posted strong underwriting income of $69.0 million with a combined ratio of 94.5%, reflecting disciplined underwriting and favorable prior period reserve development.
- The mortgage segment delivered robust underwriting income of $857.0 million and a significantly improved combined ratio of 28.9%, showcasing strong performance in this area.
- The company maintained a diversified investment portfolio with $19.6 billion in investable assets at year-end 2018, focused on capital preservation and liquidity.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 28, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $5.45B$5.63B | −3.1% |
| Interest Expense | $120.48M$117.43M | +2.6% |
| Net Income | $757.97M$619.28M | +22.4% |
| EPS (Basic) | $1.76$1.40 | +25.7% |
| EPS (Diluted) | $1.73$1.36 | +27.2% |
| Shares Outstanding (Basic) | 404.35M404.14M | +0.1% |
| Shares Outstanding (Diluted) | 412.91M417.79M | −1.2% |
05—Questions
Frequently Asked Questions
What was Arch Capital's overall financial performance in 2018?
Arch Capital demonstrated strong financial performance in 2018, reporting net income available to common shareholders of $713.6 million. The company also saw an increase in book value per share to $21.52, up from $20.30 in the prior year, reflecting effective capital management and underwriting results.
How did the different segments (Insurance, Reinsurance, Mortgage) perform?
The Insurance segment reported an underwriting loss but improved its combined ratio due to reduced catastrophe losses. The Reinsurance segment showed strong underwriting income and a favorable combined ratio. The Mortgage segment was a standout performer, delivering substantial underwriting income and a significantly improved combined ratio, indicating strong operational execution in this line of business.
What is the company's strategy regarding its investment portfolio?
Arch Capital's investment strategy emphasizes capital preservation, market liquidity, and diversification of risk. The company managed a substantial investment portfolio of $19.6 billion at year-end 2018, with a focus on high-quality fixed-income securities while also holding strategic investments.
What is the company's approach to managing risk?
Arch Capital employs a comprehensive Enterprise Risk Management (ERM) framework that covers underwriting, reserving, investment, credit, and operational risks. This framework includes setting risk appetite and exposure limits, continuous monitoring, and regular reporting to the Board and its committees to ensure robust risk oversight.
06—Continue